AGCC push for single currency

MANAMA - Gulf Arab states which plan to unify their dollar-linked currencies by 2010 are likely to float the new single currency to form a benchmark for other Arab countries, the United Arab Emirates said on Tuesday.

By (Reuters)

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Published: Thu 2 Dec 2004, 12:50 PM

Last updated: Thu 2 Apr 2015, 11:46 AM

"In the future it will not be pegged to any currency at all, but other currencies will be pegged to it — currencies in the region," UAE Central Bank governor Sultan Nasser Al-Suweidi told reporters in Bahrain. Suweidi, whose country has offered to host a Gulf Arab central bank, said a powerful regional currency was vital in a world divided into closely integrated economic areas.

"We need to create a large regional currency and we need to develop our economy in the region," he said. "The world is becoming (a world of) blocs."

The six nations of the Gulf Cooperation Council (AGCC) — Saudi Arabia, Oman, the United Arab Emirates, Bahrain, Qatar and Kuwait — have already established a customs union and aim to unify their currencies by the end of the decade. All six countries, which control nearly half the world's proven oil reserves, now have currencies pegged to the dollar. Suweidi played down the short-term impact of the weak dollar and said the link had served his country well in the past. Even in the first years after 2010 when the Gulf states hope to unify their currencies the dollar peg could remain, he said.

"Beyond (2010) we will start thinking about de-linking the unified currency so it can float on its own," he said. "It would have to gain ground first for maybe two or three years".

He declined to say which Arab countries might link their own currencies to the new unified Gulf money. "There are ideas in all Arab countries around us," he said. "It's very difficult to see now, but we think the need will drive them". AGCC officials say the six Gulf states have yet to agree on convergence criteria for their planned currency, including what limits to set on government deficits.

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